Funding is a
critical part of
any business,
whether it is a
real estate
investing
business or some
other type of
business. In
this article I
describe some
ways to fund
your foreclosure
investing deals.
A business won’t
last long
without the
funding it needs
to stay afloat
and to conduct
business. In the
business of
creative real
estate it’s
important to
have that
funding in place
as quickly as
possible and as
accessible as
possible.
Realize, though,
that it will
take time to
find people so
start now and
remember it will
take a track
record to get
your private
money. That
being said if
you find the
right deal you
can find the
money. The right
deal would be
70%
Loan-To-Value
after repairs.
There are many
strategies to
secure the
funding you need
to lock in good
deals like that.
When I first
began as a real
estate investor
I neglected the
importance of
having funding
in place so I
could pull the
trigger on deals
as they came up.
Where was I
going to find
the money to
fund the deals I
would always ask
myself? I saw
many other
investors doing
deals and having
the funding in
place.
I went through
the basic
avenues of where
to get money.
Where is the one
place that
everyone thinks
they can get
money? A bank,
right?
I came to find
out that is the
wrong answer.
What is the
preoccupation
with banks in
this country? I
can only figure
that is the way
people have been
trained. My
thought is that
there must be a
reason why many
of the tallest
buildings in any
given town have
the name of
banks on them. I
don’t want to
fund those
buildings or
those names on
them.
In my entire
career as a
full-time real
estate investor
I have never
used a bank to
fund any of my
deals. There are
other ways you
can fund your
deals besides a
bank.
If your house
has enough
equity you can
take out a home
equity loan
where you write
yourself a check
against the
equity in your
house. You can
also open a line
of credit on
your house. You
can create
partnerships
with other
investors where
you can share a
percentage of
the profits.
When I first
started in this
business my
first investor
would write the
checks for any
amount I asked
him
for--however, he
charged
outrageous fees.
For example, if
I borrowed
$100,000 and we
made $30,000 on
a deal, my
investor got his
$100,000 plus
12% while the
deal was in
process, as well
as half the
profits at the
back end. In the
long term, we
would split the
profit and the
investor would
get half the
profits, plus
12%. It was
very, very high,
but you know, I
needed the money
and I wanted to
get my business
started and I
was willing to
do it. Over time
I learned that
that was very
expensive money
so I began
looking for
other ways to
fund my
business.
One of the first
ways you can
fund your
business is to
look for
creative funding
or financing
techniques with
the sellers of
the properties.
A lot of times
sellers that are
motivated to
sell their homes
will do just
about anything
to make a deal
happen because
they want out of
the house. As my
business began
to grow and the
activity began
to grow, I knew
that the number
one activity in
my business was
to find funding,
particularly
private money.
